African Solidarity Fund

The Agreement establishing the African Solidarity Fund was adopted by the National Assembly of France and signed in Paris on 21 December 1976. The purpose of the ASF at that time was to facilitate the economic development of the participating African States - mainly States most disadvantaged by structural factors - by contributing to the financing of investment projects of particular interest. Fifteen African States and France participated in the creation of the Fund.[2] The application for membership of three other African countries was accepted by the original members as early as April 1977.[3] In France, the creation of the Fund was the subject of Law no. 77-732 of 7 July 1977.[4]

ASF operations began in 1979.[5]

The French National Assembly adopted several amendments to the Agreement establishing the Fund in 1991. Law No. 91-1401 of 31 December 1991 validated changes to the conditions of guarantees of repayment, the headquarters, the resources, the operations, and the organization of the Fund. With regard to the headquarters, Law No. 91-1401 indicates that – even if the Agreement of 21 December 1976 had fixed the seat "provisionally" in Paris – since its creation, the headquarters of the Fund had always been established de facto in Niamey, Republic of Niger.[6][7]

After more than 30 years of existence, the Fund's constituent texts were subject to further revision. Thus, at their meeting on 20 December 2008, held in Niamey, the Ministers responsible for the Fund adopted the Revised Agreement establishing the African Solidarity Fund. The Revised Agreement entered into force upon notification of its ratification by the majority of signatory States.[8] France, which ratified the Agreement of 21 December 1976 and participated in the activities of the Fund until 2000, is not among the signatories to the Revised Agreement.[9]

The mission of the ASF is to facilitate the economic development of its African member states by acting as a catalyst of the financial systems in order to allow, on the one hand, access to credits intended to finance productive investment projects, and on the other hand, by facilitating the mobilisation of local and external savings, in particular through guarantee interventions on financial markets.[10]

The current member states of the ASF are Benin, Burkina Faso, Burundi, Central African Republic, Côte d'Ivoire, Gabon, Guinea-Bissau, Mali, Mauritania, Mauritius, Niger, Rwanda, Senegal, Chad and Togo.[11]

The management of the ASF's internal structures is ensured by the General Assembly, which includes: the Ministers of Finance of the Member States, the Board of Directors with one administrator per member state, and the General Direction.[12]

The internal structures that guide ASF's operations are: the Higher Intervention Committee (CSI), which exercises the prerogatives of the Board of Directors in matters of interventions by the ASF for all cases where the amount is greater than 500,000,000 FCFA (around 922,657 USD); and the Restricted Credit Committee (CCR), which exercises the prerogatives of the Board of Directors for interventions, the ceiling for individual approval of which is set below an amount of 500,000,000 FCFA per intervention.[13]

The financial resources of the ASF consist of endowments resulting from shareholder (member state) capital payments, operational revenue, investment gained from earnings, grants, resources allocated to specific tasks related to third-party fund management, and revenue from fixed deposits.

The ASF intervenes in all sectors of the national economies of its member states. It also intervenes in all stages of economic activity including enterprise creation, expansion and/or strengthening of operational capacities, and restructuring.[14]

The principal types of intervention are the guarantee, refinancing, interest rate subsidies, stake acquisition, third party fund management, and arrangement of structuring the financing for small and medium-sized enterprises (SMEs).

Loan guarantees are the most commonly practiced type of intervention. The ASF approved 35 new loan guarantee operations in 2019. Refinancing operations are less common, amounting to only 5 operations in 2019. Given, however, an increasingly restrictive regulatory environment as well as the economic fall-out of the COVID-19 pandemic, the demand for refinancing services is expected to increase significantly.[15]

Since 1996, the ASF has worked closely with the West African Development Bank (BOAD). Their cooperation agreement was renewed in November 2013. As part of this agreement, the ASF provided both guarantees and interest rate subsidies for several loans. This permitted the BOAD to increase the volume of loans that it provides to investors in the West African region.[16]

In July 2018, the ASF signed a partnership agreement with the French Public Investment Bank Bpifrance. The general objective of this partnership is to promote the development of the private sector and the commercial public sector in ASF member countries. Bpifrance wants to thereby strengthen the capacities of the ASF to better meet the needs of investors in its areas of intervention.[17]

On January 25, 2020, the ASF signed a partnership agreement with the Development Bank of the Central African States (BDEAC). This agreement was siged with a view to increasing the financing of public and private investments in ASF member states. For the ASF, this implied a substantial increase of ASF interventions in the Central African region.[18] In a follow up to this partnership agreement, the BDEAC, ASF and the Gabonese company SERUS Investments SA convened on September 6, 2021 in Niamey, Niger, to sign a guarantee agreement facilitating the construction of a major business and hotel complex in Moanda, Gabon. ASF agreed to guarantee 60% of the proposed investment loan, amounting to the equivalent of about 2.74 million USD.[19]

The ASF has been subject to four external audits by the West Africa Rating Agency (WARA),[20] conducted in 2018, 2019, 2020 and 2021. The most recent external audit, conducted in July 2021, assigned an overall rating of AA+ while the outlook was rated positive. The auditors noted, among other things, robust capitalization, very high asset liquidity, good geographic and sector diversification, sound governance, and prudent strategic positioning. Asset quality, as measured by the ratio of gross delinquencies to total on- and off-balance sheet liabilities, averaged 5.7 percent over the past three years, which is a good level according to WARA's rating scale. WARA's rating reports are available online.[21]

In January 2021, ASF's compliance with ISO 9001:2015 was certified by the UK branch of Veritas Certification Holding SAS.[22] Compliance with ISO 9001:2015 may serve as an objective and verifiable indicator of ASF's strong performance in terms of operational management and fund administration.[23]

The ASF is one of the three main multilateral financial guarantee institutions on the African continent, the others being: the African Guarantee Fund (AGF)[24] and the Fonds Africain de Garantie et de Coopération Economique (FAGACE).[25] Due to differences in their corporate reporting practices, it is difficult to compare the performance and impacts of these three regional bodies. Nevertheless, it may be noted that the ASF has achieved a higher independent rating (AA+) than the AGF (AA-) and FAGACE (A-). Its rating report can be consulted online. Furthermore, the ASF, with its own capital equivalent to about 110 million USD in 2019, enabled the financing of 365 investment projects in its 14 member states during the past three decades (FAGACE: 302 projects; AGF: not available).[26]

Mauritania joined the ASF in July 2021.[27] Three other African countries have indicated their intention to join the ASF: Cameroon, Equatorial Guinea and Guinea.[28]

The President of Chad, Idriss Déby, has recommended that the ASF should be transformed into a specialized institution of the African Union. This recommendation has received the support of the Prime Minister of Niger, Brigi Rafini.[29]

https://fondsolidariteafricain.org